legal and ethical enviroment of business


In Chapter 16 you learned about different conditions that relieve parties from performance despite having executed a valid and binding contract. Commercial leases and private landlord-tenant leases are common forms of contracts. In some cases, these leases contain a force majeure clause which might excuse one or both parties’ performance obligations when circumstances occur which are beyond the parties’ control and make performance of the contract impractical or impossible.

Below is an example of force majeure events typically enumerated in a lease.

“Landlord and Tenant shall each be excused from performing its obligations in the event, but only so long as the performance of any of its obligations are prevented or delayed, retarded or hindered by act of God, fire, earthquake, riot, mob violence, governmental action or inaction, strikes, pandemics, epidemics, acts of terrorism or any other cause, whether similar or dissimilar to the foregoing, not within the reasonable control of the party or its agents, contractors or employees…”

Consider the following fact patterns and decide whether the tenant could successfully invoke the force majeure clause, and which specific provisions, in the lease to stop paying rent and cancel the lease. Keep in mind the prevailing legal terms in the contract from which your response pivots. These situations are classic examples of applying facts to a legal issue.

  1. In March 2020, the coronavirus reaches the shores of the United States. You are a college student renting an off-campus apartment. In light of the virus your school shuts down March 30th and you are told to return home to begin virtual classes. Your annual lease was set to expire June 1, 2020.
  2. Similar facts except it is now October 1, 2020 and you are told your classes will be virtual for the remainder of the semester after starting face to face classes. You entered into your lease on Sept. 1, 2020 for a year. Same or different result from #1? Why may the result be different?
  3. You are a small business leasing commercial space in a downtown retail area. After the death of George Floyd peaceful BLM protesters take to the streets.. Out of town militia arrive to take back the streets in light of the reluctance of police to protect the business district. Fights break-out. Looting occurs. Customers are afraid to shop. You close your business and can not foresee a time when you can safely reopen.

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